Correlation Between Real Estate and Loft II
Can any of the company-specific risk be diversified away by investing in both Real Estate and Loft II at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Real Estate and Loft II into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Real Estate Investment and Loft II Fundo, you can compare the effects of market volatilities on Real Estate and Loft II and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Real Estate with a short position of Loft II. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Estate and Loft II.
Diversification Opportunities for Real Estate and Loft II
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Real and Loft is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Real Estate Investment and Loft II Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loft II Fundo and Real Estate is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Real Estate Investment are associated (or correlated) with Loft II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loft II Fundo has no effect on the direction of Real Estate i.e., Real Estate and Loft II go up and down completely randomly.
Pair Corralation between Real Estate and Loft II
Assuming the 90 days trading horizon Real Estate Investment is expected to under-perform the Loft II. But the fund apears to be less risky and, when comparing its historical volatility, Real Estate Investment is 5.14 times less risky than Loft II. The fund trades about -0.09 of its potential returns per unit of risk. The Loft II Fundo is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 875.00 in Loft II Fundo on August 27, 2024 and sell it today you would earn a total of 75.00 from holding Loft II Fundo or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Real Estate Investment vs. Loft II Fundo
Performance |
| Timeline |
| Real Estate Investment |
| Loft II Fundo |
Real Estate and Loft II Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Real Estate and Loft II
The main advantage of trading using opposite Real Estate and Loft II positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Estate position performs unexpectedly, Loft II can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Loft II will offset losses from the drop in Loft II's long position.| Real Estate vs. BTG Pactual Logstica | Real Estate vs. Plano Plano Desenvolvimento | Real Estate vs. Companhia Habitasul de | Real Estate vs. The Procter Gamble |
| Loft II vs. BTG Pactual Logstica | Loft II vs. Plano Plano Desenvolvimento | Loft II vs. Companhia Habitasul de | Loft II vs. The Procter Gamble |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |